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Exam 9: Accounting for Current Liabilities

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Question 91

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Employees earn vacation pay at the rate of one day per month.During the month of June,10 employees qualify for one vacation day each.Their average daily wage is $150 per day.Which of the following is the necessary adjusting journal entry to record the June vacation benefits?

A) Debit Vacation Benefits Expense $1,500; credit Prepaid Vacation Benefits $1,500.
B) Debit Vacation Benefits Expense $1,500; credit Vacation Benefits Payable $1,500.
C) Debit Payroll Tax Expense $1,500; credit Payroll Taxes Payable $1,500.
D) Debit Prepaid Vacation Benefits $1,500; credit Vacation Benefits Payable $1,500.
E) Debit Vacation Benefits Payable; credit Vacation Benefits Expense $1,500.

F) C) and D)
G) All of the above

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Question 92

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A company borrowed $60,000 by signing a 60-day,5% note payable from its bank.Compute the total cash payment due on the note's maturity date.

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At maturity: $60,000...

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Question 93

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The correct times interest earned computation is:

Deposits of amounts payable to the federal government may be paid through federal depository banks.

The amount of federal income tax withheld from employee pay depends on the employee's annual earnings rate and the number of withholding allowances claimed by the employee.

Short-term notes payable:

Match the following items with the appropriate designation (Current liability, Long-term liability, or Not a liability) . -FICA taxes payable

An employer has an employee benefit package that includes employer-paid health insurance and an employer-paid retirement program.During March,the employer paid $5,500 for health insurance,and contributed to the employee retirement program 10% of the employees' $120,000 gross salaries.Prepare the journal entry to record these employee benefits.

The more ________ allowances an employee claims,the less federal income tax the employer will deduct from pay.

To compute the amount of tax withheld from an employee's pay,employers can use a ________ table.

A potential lawsuit claim is disclosed when the claim can be reasonably estimated and it is reasonably possible.

FICA taxes include:

Which of the following is not true regarding the unemployment insurance program?

Contingent liabilities are recorded in the accounts if the future event is ________ and the amount owed can be ________.

During June,Vixen Company sells $850,000 in merchandise that has a one year warranty.Experience shows that warranty expenses average about 3% of the selling price.Customers returned $14,000 of merchandise for warranty replacement during the month.The entry to settle the customer warranties is:

A company's fixed interest expense is $8,000,its income before interest expense and income taxes is $32,000.Its net income is $9,600.The company's times interest earned ratio equals:

Drake Company pays its employees for two weeks of vacation each year.The total annual cost of the vacation benefit is $109,920.Prepare the journal entry to record the monthly accrued vacation expense.

A company's employees had the following earnings records at the close of the current payroll period: $\begin{array}{lll}&\text {Prior Pay}&\text {Earning this}\\ &\text {Earning}\\&\text { through}\\ \text {Employees}&\text {Period}&\text {Pay Period}\\\text { F. Argent } & \$ 11,300 &\$3,900 \\\text { A. Garza} & 6,100 & 2,500 \\\text { L. Hong } & 9,500 & 3,100 \\\text { R. Levinson } & 4,800 & 1,400 \\\text { J. Young } & 10,000 & 3,000\end{array}$ The company's payroll taxes expense on each employee's earnings includes: FICA Social Security taxes of 6.2% on the first $118,500 of earnings plus 1.45% FICA Medicare on all wages; 0.6% federal unemployment taxes on the first $7,000; and 2.5% state unemployment taxes on the first $7,000.Compute the employer's total payroll taxes expense for the current pay period.

A company sells its product subject to a warranty that covers the cost of parts for repairs during the six months after the date of sale.Warranty costs are estimated to be 5% of sales.During the month of July,the company performed warranty work and used $11,000 of parts to perform the warranty work.Sales for July were $450,000. 1.Record the warranty expense for the month of July. 2.Record the costs of the warranty work completed in June. 3.If the Estimated Warranty Liability account had a credit balance of $10,000 on May 31,what is the account balance at July 31?

Early Co.offers its employees a bonus equal to 2% of the company's net income.The estimated net income for the year is expected to be $800,000.Prepare the general journal entry to record the estimated employee bonus plan expense.